A married insured pays premiums on a life policy with community funds and names a beneficiary other than the spouse. Which statement about the spouse's rights is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In California, a life insurance policy purchased with community funds during marriage is community property to the extent of the community's contribution. The spouse may therefore hold a community interest in the policy's cash value and, in some circumstances, in the death proceeds. A beneficiary change that diverts a community interest may require the spouse's consent, and CIC Section 10172 expressly addresses the interplay with the Family Code sections governing community property. This is why married policyowners often need spousal consent or a written waiver when changing beneficiaries.
Why the other options are wrong
- B) The beneficiary designation does not extinguish a spouse's community property rights. The spouse may have a claim even when not named as beneficiary.
- C) The spouse does not automatically receive the full death benefit. The community interest depends on the funding and ownership history of the policy.
- D) Community property law frequently applies to life insurance purchased during marriage with community funds, so it cannot be dismissed as inapplicable.
Memory hook
Community funds mean a community interest; the spouse may hold a veto on the change.